However, the third edition of the Bank Sarasin Islamic Wealth Management Report notes that there are risks involved, as converting a business to Islamic principles is "complex", and there are many issues to consider, including the business’s location.
For example, “a butcher in Germany who might wish to be publicly declared halal to attract new or different types of customers would need to address many issues”, it says, that a company based in Saudi Arabia might not need to.
The Sarasin Group, which has its roots as a Swiss private bank, launched a full range of Shariah-compliant banking products and services in 2009. These now include estate and succession planning and financing and asset management services, including money market and structured products such as Wakala Murabaha and Maraya.
The bank has also established a Shariah advisory board to ensure its Shariah products are at all times compliant.
The report comes even as conventional banks in Qatar are having to dispose of their Shariah-compliant operations following a surprise edict by the Qatar Central Bank last February. As reported, the QCB’s surprise announcement on 6 Feb that it was to require conventional banks operating in the country to get out of Islamic banking prompted speculation that the central banks in some other countries with a high proportion of Muslim citizens could follow suit. Most recently, the International Monetary Fund said in a recent report on Qatar that its research team had been informed by the QCB that "conventional banks [in Qatar] would not be allowed to have Islamic subsidiaries, and they would not be allowed to invest in sukuk’," according to a recent report in the Doha-based Gulf Times.
‘Numbers speak for themselves’
The most compelling argument for businesses to go after the Muslim market is its size, the report notes, pointing out that it accounts for around 23% of the world’s population, or 1.9 billion people “across 112 countries”.
“Demographics also make marketers salivate – of that 1.9 billion, 43% are under the age of 25. That’s equal to about 10% of the world’s population.
“And there’s more to come. The Muslilm population is expected to increase by 26% to 2030 to approximately 2.2. billion. In numerical terms the 1.9 million Muslims of 2010 will begat a further 300 million, the equivalent of today’s US population, by the end of this decade (representing a 19% increase).
“Muslims currently have a 7.7% share of global GDP, which is expected to grow to 8.7% by the end [of] 2016.”
Compelling though the numbers may be, Sarasin said conversion is not a simple matter, since Muslim consumers “are far from homogenous”, do not speak a single language, and the traditional Muslim world is currently experiencing dramatic changes, as evidenced over the past year by the Arab Spring in parts of the Gulf.
“This report does not claim to be a guide” for those looking to convert their businesses to Islamic principles, Sarasin stresses early on in its introduction.
“Rather it addresses various issues that need to be considered when converting a business to Islam.”
For more on the report and to download a copy, click here.
